NCPA - National Center for Policy Analysis

Lessons from Pennsylvania

September 4, 2003

Energy deregulation is a success in Pennsylvania, says Rep. Joseph R. Pitts (R-Penn.). In the 1990s, the state deregulated its energy market in response to skyrocketing prices for electricity. Since then, the program's success has been touted as an example of how the United States can handle the issues facing our nation's energy system while reducing costs for consumers, he says.

However, rather than embark on a wholesale deregulation program, Pitts explains, Pennsylvania wisely set up pilot projects to ensure that deregulation would actually work in lowering energy prices while maintaining reliability.

When given more choices, customers switched to alternative suppliers, lowering the price they paid for power. According to a 2001 report in State Policy & Economic Development:

  • Pennsylvania has been successful in achieving rate-savings to customers.
  • Between 1996 (when the restructuring began) and 2001, residential consumer rates fell more than 10 percent.
  • Over the entire state, there were $450 million in guaranteed rate reductions in 1999 and there was nearly $100 million devoted to prospective funding for low-income universal service and energy conservation programs per year.

Source: Joseph R. Pitts, "Follow Pennsylvania's example," Washington Times, September 4, 2003.


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